LICENSED MARKET WELL ON TRACK
18 January 2017Last year in my review of the licensed and leisure property market, I predicted that we were finally seeing light at the end of a particularly long tunnel and that we could expect to emerge into a brighter and potentially more prosperous landscape. In reviewing the past year’s activity and looking ahead to 2017, I am happy to report that this has been a comparatively busy year for transactions with pub sales of over £10 million, portfolio expansion and a number of hotels either newly-opened or under construction.
Pub sales got off to a flying start in the first quarter of 2016 with the sale of the Botanic portfolio involving several landmark Belfast pubs including the King’s Head, which was acquired by Winemark. The Botanic Inn passed to the Mooney Group while Madison’s was acquired by a local developer and leased subsequently to a Dublin-based operator who plans a major refurbishment of the premises during 2017. More recently, Wetherspoon’s has sold premises in Ballymena, Enniskillen, Coleraine in addition to two pubs in Derry, and we believe that they are focusing on creating three “super” pubs in Belfast. Meanwhile privately-owned and locally-operated Granny Annie’s opened for business in Belfast and Ballymena and is hoping to roll out more pubs in Portrush, Derry and Coleraine over the coming months.
The hotel sector is experiencing a significant resurgence with a number of new hotels either winning planning approval or in development. The transformation of Windsor House in Belfast city centre into the Hasting Group’s 235-bed, Grand Central Hotel, is underway whilst developer, McAleer & Rushe, has begun construction work on a 206-bed, Maldron Hotel, on behalf of operator, Delata Group. It is believed that both hotels are due to open in 2018.
The sector received an additional boost with the mid-year announcement that the Marriott Group had chosen the Harbour Commissioner’s-backed City Quays development for the site of what will be the Group’s first lifestyle AC Hotel in Northern Ireland. During the year, planners also gave approval for two more hotels in Belfast: a 179-bed hotel on Hope Street under the aegis of the Andras House group and a 17-bed boutique hotel at Bank Square beside the Mourne Seafood Bar and Kelly’s Cellars. Meanwhile, the War Memorial Building, which has planning consent for a hotel, was sold during the year by the former owners of the Kremlin to a private operator and is now under refurbishment.
And last but not least, Bullitt Hotel, the latest undertaking by the Beannchor Group, opened its doors mid-October and is already being lauded for its fresh and quirky approach and style.
Few hotels changed hands during 2016, however sales included The Balmoral in Belfast and The Eglinton in Portrush.
Beyond Belfast, the market has been fairly weak with few pubs changing hands and demand low. Liquor licenses are worth £80,000 on average with demand coming almost exclusively from convenience operators. On a more positive front, it is encouraging to note that ,while 2016 saw a number of distressed sales coming through, the number of private sales is increasing steadily and now exceeds forced sales. In fact, we expect to see far fewer distressed sales during the year ahead.
Looking ahead to 2017, we anticipate that the vast majority of pub sales will be on behalf of private sellers, which will engender a more “normalized” market; Meanwhile, work continuing on the plethora of hotel developments and refurbishments underway currently will boost employment opportunities considerably both during construction and post-completion. However, as we move relentlessly towards a future outside the EU with its many hurdles, challenges, and perhaps opportunities , all of which are unknown and untested, let us hope that we are not about to re-enter the tunnel!